Joined: 20 Mar 2009 Location: United States
Online Status: Offline Posts: 36
Posted: 21 Sep 2009 at 18:44 | IP Logged
My Bad its $510,000 for the A/P Balance
Btw, good catch why would a supplier pay you when it should be other way around.. lol
__________________ To try and fail is atleast to learn; to fail to try is to suffer the inestimable loss of what might have been - Chester Bamaro
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Joined: 19 Jun 2009
Online Status: Offline Posts: 106
Posted: 22 Sep 2009 at 01:46 | IP Logged
I believe, the fact pattern is saying that the Lyle has
paid an advance of 50K to Ross (Supplier) for
manufacturing goods for Lyle (Customer). Lyle would have
debited Ross (Supplier) a/c that resulted in Contra
liability (Debit in Supplier a/c). Because of Ross's
Debit balance the overall AP balance would have come down
by 50K. If you look at this trx, it's only an advance to
supplier for future delivery of manf goods, but Ross has
neither delivered goods nor raised Supplier invoice.
Therefore, the adjustment is to move this amount from AP
to Advances to outsiders. This adj takes the 360K to
410K.
This is my understanding but it could be
incorrect...appreciate comments..
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Topic: Revenue Recogniton
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